Published on Tuesday, November 20, 2007

A380 - white elephant or lion king?

While passengers – including the media – flying the inaugural Airbus A380 flight from Singapore to Sydney went gaga over the inflight facilities, it was left to the cool head of financial guru Shukor Yusof to deliver a more sobering assessment of the super jumbo.

Yusof, speaking at the Association of Asia Pacific Airlines’ summit, asked whether the A380 was a “White Elephant or Lion King?”

Yusof, editorial director of Standard and Poor’s Equity Research, said major airlines such as Singapore Airlines, Emirates and Qantas would have no trouble making a success of A380 operations.

“Our reservations, however, lies with second tier airlines in the Asia-Pacific who are unlikely to maximise yield on the A380 as successfully as Singapore Airlines, Qantas and Emirates.

“The A380, in our opinion, is a wonderful product but it will be tricky for the manufacturer to make it a financial success,” said Yusof.

He said he doubted that Airbus would break even on the A380 project by achieving target sales of 420 aircraft.

John Leahy, Airbus chief operating officer, customers, told Travelmole that he “strongly disagreed” with S&P’s assessment of the A380.

“Standard and Poor’s does not understand the economics of airlines,” he said.

“If it can make money for Singapore Airlines it can make money for second tier airlines."

Leahy said that all A380 original customers had stayed with the programme despite the severe delays to deliveries, and new orders were still coming in.

However, industry analysts suggest that none of the airlines affected by the delays would have paid the original asking price for the aircraft.

Special on location report by The Mole

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